The options that New Jersey residents who buy their own insurance will have next year may have expanded yesterday, when President Barack Obama announced that current individual health plans wouldn’t have to meet new federal regulations in 2014.
Whether these people will be better served keeping their current plans or switching to plans offered through the new federal health insurance marketplace, also known as the exchange, can vary depending on the circumstances of each individual or family.
It’s not yet clear whether insurers in New Jersey, in light of Obama’s announcement, will reconsider their decisions to discontinue a number of their current individual plans next year or whether state regulators would permit them to rescind those decisions.
In addition, it’s not clear how continuing to offer these plans would affect their premiums, as well as the premiums of the new marketplace plans.
The insurers that offer individual and family plans this year and through the marketplace –- AmeriHealth New Jersey and Horizon Blue Cross Blue Shield of New Jersey -- had decided against seeking to “grandfather” their plans from new ACA regulations. This led to thousands of New Jersey individual insurance customers receiving notices that they must enroll in new plans.
This became part of a national outcry as doubt was cast on Obama’s statements that people who liked their current insurance would be able to keep those plans.
The president responded yesterday by saying that no ACA regulations would apply in 2014 to any existing plans for current customers of those plans.
Horizon spokesman Thomas Vincz said company officials have to evaluate how the company could offer current plans next year “in such a short period of time,” while AmeriHealth spokeswoman Jill Roman said company officials were “moving quickly” to understand the implications of Obama’s announcement and working with state officials to determine the “the most prudent way to assure that our customers have health care coverage and affordable options. We want to make this as easy as possible for our customers.”
State Department of Banking and Insurance spokesman Marshall McKnight said the department was reviewing information that the federal Centers for Medicare and Medicaid Services provided regarding Obama’s announcement yesterday.
National insurance industry representatives responded to Obama’s announcement by cautioning that allowing young, healthy people to keep their current individual insurance plans would lead to higher premiums for the remaining consumers in the marketplace. Federal officials responded by saying they would make regulatory changes to offset the impact on premiums.
The open enrollment period for marketplace insurance, which began on October 1 and will last until March 31, 2014, has been hobbled so far by the technical flaws of its website, healthcare.gov.
While federal officials have said that the marketplace website’s performance is improving, federal data released on Wednesday for the exchange’s first month showed exactly how slow enrollment in New Jersey has gone. Only 741 New Jersey residents enrolled in health plans through November 2, which is just over one-tenth of 1 percent of the estimated 628,000 residents eligible for insurance through the marketplace.
While there is much uncertainty about the next step for insurers, what is becoming clearer is how current insurance customers would be affected by the changes that were in place before Obama’s announcement.
A comparison of the plans that are currently offered with those that are being offered through the marketplace shows that many people would receive both more extensive benefits and lower costs in the form of premiums and out-of-pocket expenses. However some people , such as young men, would see substantially higher premiums.
One example is provided in the changes occurring for customers of AmeriHealth, which is one of three companies selling individual and family health insurance through the marketplace, along with Horizon and Health Republic Insurance of New Jersey. Insurance offered through the marketplace will begin on January 1, 2014.
The difference in costs is stark between young men and women for the most popular current individual plan and the most similar plan in the marketplace. A 27-year-old man currently pays $218 per month for an individual plan that requires $30 copayments for visits to primary care doctors, while a plan with the same copayments through the marketplace would cost $379 per month.
But a woman of the same age would benefit from a provision of the 2010 Affordable Care Act that prohibits using a person’s sex to determine premium rates. A 27-year-old would currently pay $476 per month but would pay the same $379 rate as a man in 2014.
Both sets of plans require patients to pay $100 for emergency room visits and the plans all offer similar networks of healthcare providers from which patients can choose. But the differences between the current and future plans are extensive, and premiums describe only a small part of those differences. There are some advantages to the current plan. For example, visits to specialists have $30 copayments, compared with $50 copayments in the new plan.
But overwhelmingly, the benefits are more extensive in the marketplace plans due to the ACA’s requirements. For example, the most popular current plan does not cover prescription drugs, ambulance fees, chemotherapy, durable medical equipment, chiropractic care and hospice care, while the most similar marketplace plan does provide at least some coverage for these services.
In addition, the most popular current plans limit insurance payments for specialists to $700 annually – or roughly 23 visits. There is no similar limit for plans under the ACA.
The difference between the amounts paid for hospital stays would depend on how many hospitalizations a patient requires. Patients in the most popular current plan pay a $500 copayment per hospital stay, while patients in the most similar marketplace plan must pay a deductible of $1,500 for hospital fees, then 30 percent of additional healthcare costs until they reach an annual maximum out-of-pocket expense of $2,500. There is no maximum on annual expenses under the current plan.
Another difference regards how pre-existing conditions are handled. Under the most popular current plan, patients who have had a break in their insurance coverage have to wait a year before the insurer will pay for treatment of pre-existing conditions, while treatment of pre-existing conditions is paid for under the marketplace plans.
“It’s hard to draw a direct comparison between these, because they’re so vastly different, but it’s fair to say that you’re getting more coverage,” said Mike Munoz, AmeriHealth’s senior vice president of sales and marketing. Munoz also noted that the company is offering new sets of plans that offer lower premiums and more limited networks of providers than existing plans. These include plans that offer less expensive care at “Tier 1” hospitals and at Cooper University Health Care-affiliated providers.
For AmeriHealth, the design of the marketplace plans was “a matter or providing options and multiple price points and that’s what we’ve tried to do,” Munoz said. Consumers who select more limited local networks will pay 10 percent less than customers that choose the most extensive AmeriHealth plan, while those that choose a plan with only Tier 1 hospitals will pay 18 percent less and those who choose the Cooper plan will pay 20 percent less.
Obama said yesterday that when he said people would be able to keep their plans, he expected they would be covered by plans “grandfathered” by insurers. He also said that he expects more people who currently would prefer to keep their current plans to eventually see the value of the marketplace plans, as they seek medical care and protections provided by the ACA.